Prepare to address LDC graduation-linked challenges

Experts yesterday urged the government to do its homework and prepare for any post-graduation challenges Bangladesh may face when it leaves the list of least-developed countries (LDC) in 2026.   

Preparations need to be made from now on in order to overcome the challenges of graduation so that the country does not need to apply for a further extension of its transition period, they said.

Terming LDC graduation a great achievement for the country, they underscored the need to ensure smooth and sustainable graduation.

The experts made these comments while discussing the benefits and challenges of graduation in a webinar styled, "Bangladesh's Transition to Developing Country – Biggest Milestone in Her Development Journey".

The Canadian University of Bangladesh organised the webinar.

The panel of discussants said it would be a shame for the country if it has to appeal for more time to make the transition.

In the last week of February, the UN Committee on Development Policy gave a final recommendation on the country's graduation to a developing nation.

According to the committee's guidelines, Bangladesh was supposed to leave the LDC group in 2024, but the government sought to extend the transition period by two years due to the economic fallouts of Covid-19.

Ahsan H Mansur, executive director of the Policy Research Institute, said the graduation is not any single person's achievement; rather it is an achievement for the entire nation.

Mansur also said the country's per capita income, which was at $123.50 until 1971, drastically dropped to $94 in 1972 following the war.

"It was such a great shock to the country and its economy when the central bank did not have a single dollar to operate foreign trade. We had no gold in our fund," he said. 

"But for Bangladesh to reach its current stage from that devastating position is such a great achievement," Mansur added.

The post-1972 assessment of Bangladesh was very frustrating as there was a general consensus that the international community would need to protect and support the country forever. However, foreign aid now accounts for just 1.5 per cent of the country's national income.

The noted economist also stressed the need to open up the local market for international players.

While tagging the local market as highly protected, Mansur said the country's average protection level is as high as around 27 per cent.

The average protection level in both India and China stands at 9 per cent, while it is 7.4 per cent for Asean countries.

"We need to build up a competitive economy as we can't progress much with a protected economy," Mansur said.

The export volume of both Bangladesh and Vietnam was just $1 billion in the early 1990s. Vietnam's current exports amount to $270 billion against Bangladesh's $40 billion.

"We need to reach that level," said Mansur, also a former official of the International Monetary Fund.

He also said that the country should work to strengthen its international political and economic diplomacy to achieve its various interests, such as securing the generalised system of preferences-Plus after graduation.

Mirza Azizul Islam, a former adviser to a caretaker government, said that since the country may face challenges such as the loss of duty-free access to different international markets after graduation, efforts should be given for bilateral, regional or sub-regional trade arrangements to attain duty-free or less-duty export facilities.

Islam went on to say that even after facing 14 to 15 per cent duty on exports to the US, the country is doing much better compared to its LDC peers.

Prof Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue, said Bangladesh needs to take preparatory measures in the next five years to ensure a smooth transition to the developing status and make graduation sustainable.

Rahman underscored the need to enhance the capacity of local institutions as well as strengthen their negotiation skills.

He also called for opening a negotiation cell like the WTO Cell under the commerce ministry to deal with the complex negotiations.

Sheikh Mamun Khaled, pro-vice-chancellor of the Canadian University of Bangladesh, and Prof Shibli Rubayat-Ul-Islam, chairman of the Bangladesh Securities and Exchange Commission, also spoke.